Credit Unions: Is Service excellence enough?

As credit union professionals, we often remind ourselves that our success depends heavily on delivering excellent member service.

Case in point: At a recent industry conference, a speaker proposed that among the three commonly-recognized market strategies that enterprises pursue, only one of those three succeeds in the long-term for credit unions. That strategy is Customer Intimacy. The other two – Product Innovation and Operational Efficiency – cannot realistically be sustained because of the enormous economies of scale that are required for either.

But is Customer Intimacy enough? More directly: is Customer Intimacy actually immune to the economy of scale dynamics that prevent reaching superiority in Product Innovation and Operational Efficiency?

To answer that, consider the following thought experiment: Suppose a large national bank invested in technology that made it possible for each consumer to have a real-time, personalized, AI-driven, virtual financial adviser which they could consult with about any financial decision.  This adviser worked so well that it felt like an actual person you got to know, and they gave you data-based financial recommendations you came to rely on.

Would this provide a superior Customer Experience? Probably so. Could it be duplicated by a credit union? Likely not, at least not without a lot of collaboration and help. My point here is to demonstrate that even Customer Intimacy is not insulated from economies of scale and resources. Huge companies like Amazon build tremendous loyalty and intimacy as a direct result of scale.

That said, I believe we still have strategies that can win. But the ultimate solution for each of us is very complicated, and requires a combination of several different factors. Customer Intimacy is not enough. What do you think? What sustainable advantages can we count on — as separate FI’s, or collectively? Something noted above, or maybe something different altogether?